The question of whether an employee can earn overtime during a holiday week is a common source of confusion, stemming from the differences between federal law, state regulations, and company-specific policies. Many people mistakenly believe that working on a holiday automatically qualifies them for premium pay or that paid time off for the holiday counts toward their weekly overtime calculation. The truth is that the answer depends entirely on a few distinct factors. Understanding how hours are counted and how holiday pay is legally defined is the first step in clarifying your rights and expectations during a week containing a recognized holiday.
Defining Overtime: The Hours Worked Standard
Federal overtime requirements are governed by the Fair Labor Standards Act (FLSA), which mandates that eligible employees receive one and a half times their regular rate of pay for all time worked beyond 40 hours in a defined workweek. This 40-hour threshold is the sole determinant for federal overtime liability. The workweek is a fixed and regularly recurring period of 168 hours that an employer establishes.
The most important distinction in this calculation is that the overtime requirement is based strictly on “hours worked,” not “hours paid.” Only the time an employee is actively working is counted toward the 40-hour total required for federal overtime. Paid time off, such as a holiday, vacation, or sick leave, does not automatically contribute to the 40 hours needed to trigger federal overtime pay.
Distinguishing Holiday Pay from Overtime Pay
Holiday pay and overtime pay serve two completely different functions in compensation. Overtime is a legally mandated premium paid for exceeding 40 hours worked in a workweek under federal law. Holiday pay is not required by federal law; it is a benefit offered by an employer, often as a premium rate for working on a recognized holiday.
This premium pay incentivizes employees to work or rewards them for working on a day of cultural significance. An employee could work 30 hours in a week, including eight hours on a holiday paid at time-and-a-half, but still not receive overtime pay because they have not met the 40-hour threshold of hours worked.
What Federal Law Requires Regarding Holidays and Overtime
The FLSA establishes the minimum wage and overtime standards but contains minimal requirements concerning holidays. It does not mandate that employers provide any paid holidays; any paid time off is purely a matter of company policy or agreement.
Crucially, when an employee receives paid time off for a holiday but does not perform any work, those hours do not count toward the 40-hour threshold for federal overtime. For example, if an employee works 32 hours and receives eight hours of paid holiday time, their total hours worked for the week is 32. Since this number is below 40, no federal overtime is due.
If an employee is required to work on the holiday, those hours do count as hours worked toward the 40-hour weekly calculation. The FLSA does not require the employer to pay a premium rate for working on the holiday itself, unless those hours push the total time worked past 40.
How State Laws Impact Overtime Calculations
While the federal FLSA sets a baseline standard for overtime, several states have enacted laws that provide employees with greater protections, often resulting in overtime pay becoming due sooner. These state regulations frequently introduce the concept of “daily overtime,” which triggers premium pay based on the length of a single shift, regardless of the weekly total.
For example, states like California, Alaska, and Nevada require overtime pay for all hours worked over eight in a single workday. This can result in overtime during a holiday week even if the employee works less than 40 hours total. An employee working two 10-hour shifts in a daily overtime state would receive four hours of overtime pay, even if their total hours worked for the week was only 20. State laws generally do not mandate that paid time off for a holiday counts toward the 40-hour weekly calculation, but their rules always supersede the FLSA when they are more beneficial to the employee.
The Importance of Employer Policy and Contracts
Because federal law offers minimal requirements for holiday pay, the majority of an employee’s benefits related to working or taking off a holiday are determined by the employer’s internal rules. These policies are typically outlined in the employee handbook or an individual employment contract. Employers often offer premium holiday pay—such as time-and-a-half or double time—to encourage essential staff to work.
A company’s policy can be more generous than the law, such as by choosing to count paid holiday time toward the 40-hour threshold for calculating internal overtime eligibility. This is a voluntary decision by the employer, often adopted for morale and retention purposes. Employees should consult their specific company documents to understand their employer’s definition of a paid holiday, eligibility for premium pay, and how that paid time is factored into the workweek.
Overtime Rules for Exempt and Non-Exempt Employees
The rules for overtime, including those during a holiday week, apply almost exclusively to non-exempt employees. Non-exempt workers are typically paid hourly and are entitled to the minimum wage and overtime protections guaranteed by the FLSA. Their eligibility for time-and-a-half pay is determined by the total hours they physically work.
Exempt employees, who are often salaried and meet specific salary and duties tests, are not entitled to overtime pay regardless of how many hours they work. If an exempt employee’s workplace closes for a holiday, the employer must generally pay the employee their full weekly salary, provided the employee works at all during that week, without deducting pay for the holiday closure.